…you really do NOT need to go out to that furthest dated LEAP right away. Up to a certain point, the time decay on the 2010s will be roughly similar to the 2011s so there really isn’t that much of a benefit to buying the 2011s. Once they start to really diverge, then you just roll forward your 2010s to 2011s. Any interim price action really doesn’t matter much either because the deltas for the same strike price are also going to be roughly similar. It is potentially an additional …

Only Buying Out of The Money (OTM) Options
Time for a quick recap. Don’t loose all your money. Maximise your winners and minimise your losers. If buying options you need speed, direction and distance. Make sure you buy enough time; always buying short term options is a sure way to loose your money.
Conceptually only buying OTM options is the same as mistake three, not buying enough time. Beginning options traders think that by paying less for their options they are protecting themselves from losing all their money. However, the complete …

As I mentioned back here I placed a limit order to sell June $27.50 TTWO Calls. I was busy last week and missed the earnings call and due to email issues didn’t receive notification that my order was executed at $0.85. Truth be told, I had forgotten I placed the order until I logged on to my little used high confidence account and saw I was short .TUOFY. Since I’m in confession mode I didn’t even get around to thinking much about my new position until, well, right now. So …

Do the Greeks accurately predict the future?
FDX closed up 1.61 (+1.79%) Wednesday. The 90 Puts bid/ask mean is 2.025 (1.95-2.10) and last trade was 2.00 down .70.
Using the Greeks let’s check to see if what was theoretically meant to happen did transpire.
The delta was -0.4889. Multiply 1.61*-0.4889 = 0.79. Another day has passed so time decay, theta, should have eaten another 7cents for a total of $0.87, yet the bid/ask mean only decreased $0.65 and the last trade $0.70. Where has my 20 cents gone?
First let’s look at the theoretical …

Fusion Investment Fund sold 5 FDX June $90 Puts (FDXRR) at $4.00 on May 22nd. The analysis behind the FDX position was explained on the 21st May.
Fedex closed June 3 at $89.94, the puts last traded at $2.70. My favourite options quote provider, The OIC, shows

Bid/ask mean
2.675 (2.60- 2.75)

Open interest
4,382

Option value
2.3335

Implied volatility
33.23%

Delta
-0.4889

Gamma
0.0602

Theta
-0.0703

Vega
0.1269

As those values are the primary options values and Greeks I’ll mention, let’s quickly recap what they mean.
It’s All Greek To Me

Bid/ask mean is the average if the current price option traders are prepared to buy (bid) and sell …